In the financial world, risk management is the process of recognizing, evaluating and controlling threats to a firm’s capital and earnings. These threats may occur from a range of sources, including legal liabilities, financial uncertainties, strategic management errors, accidents and natural disasters. There are two types of events: positive events can be called opportunities, while negative events are classified as risks.
A risk management team prepares the risk management plan to identify, analyze and manage the risks associated with a particular project. It describes the performance of risk management activity and also the recording, analyzing and monitoring procedure of a risk management activity throughout the lifeline of the particular project. It also provides templates and procedures for recording and prioritizing the risk.
The Risk Management Process
The risk management process consists of 3 steps:
1. Risk Assessment & Analysis
A risk assessment determines an organization’s proneness to unknown or unpredictable events that could impact its day-to-day workings, and estimates the loss those events could have on the firm’s revenue and reputation.
2. Risk Evaluation
Once the risk assessment has been completed, the next step is evaluating the risk. A risk evaluation is a benchmarking of estimated risk against the organization’s established risk criteria. Risk criteria can comprise associated benefits and costs, judicial prerequisites, socio-economic factors and systemic malfunctions.
3. Risk Treatment and Response
Risk treatment is the implementation of procedures and policies that help mitigate or avoid risks. Its scope can further expand to disaster recovery and business continuity management.
Need for Risk Management
Risk management processes enable a company to gain a vantage from the following perspectives:
1. Identification of Risks
Risk management helps an organization to identify risks; it makes it easier for a company to take proactive remedial actions when they are aware of the risks.
2. Fiscal Advantage
Financial lenders are more willing to increase credit limits to organizations that have risk management activities in place. Further, companies with well-planned risk management can more easily be financially prepared when a problem arises.
3. Protection of Company Resources
Risk management not only identifies risks, it also helps in prioritizing a risk. This allows a company to plan and respond to risks in a quick and appropriate manner. This course of action saves a company money, time and physical resources.
4. Improvement of a Company’s Brand
When a company has its risk management processes in place, it passes a positive message about business. The stakeholders of the company feel that the organization they are dealing with is proactive and professional.
JAXA Risk Management Services in Dubai, UAE
- Exposure risk identification and analysis techniques
- Recognizing creative financing alternatives to improve cash flow and overall costs
- Assistance in managing risk management programmes
- Help in mitigating strategy weakness
- Creating a powerful IT security environment
JAXA is a firm of certified auditors, accountants, and business advisers. It is an ISO 9001-2008 certified organization based in Dubai, UAE. Our firm specializes in corporate risk management, from risk assessment and control to insurance. We will not only help clients to protect the organization, but we'll also help it thrive competitively in the world of risk. We bring great experience, best practices, and professionalism to every client and will customize our services to your individual needs.
For any risk management services in Dubai, UAE, contact us – we’d be glad to assist!
Is it enough to conduct a risk assessment once a year?
No, it is not enough to conduct a risk assessment once a year. That’d be sufficient to identify only the static risks, but dynamic risks require ongoing monitoring.
What is the difference between risk management and risk assessment?
Risk management is the identification, analysis, treatment, and monitoring of risk, while risk assessment is primarily concerned with the identification and analysis phase.